Brewery Success During Prohibition

The fate of American breweries during National Prohibition (1920-1933) is a topic that, by my canvassing, is largely elided by general brewing histories. The distilling industries are similar.

One reads often of “x” number of breweries at the outset of Prohibition (about 1200), the number that survived until repeal of the Eighteenth Amendment (about half), and the production of non-beer products during the Volstead era. Soda pop, near beer limited to .5% abv, ice cream, ice, and malt extract were all examples, stratagems to survive local or national Prohibition.

Some near beers were well-known in their day, Anheuser-Busch’s Bevo brand is an example.* The other day I examined Trommer’s near beer in New York which enjoyed notable success.

(It is possible that some regional brewing surveys, or specific company histories, are an exception to the limited brewing historical interest in Prohibition).

To the extent Prohibition-era brewing is examined it tends to be of illicit production: bootlegging, Al Capone (of “I don’t know what street Canada is on” fame), speakeasies, and home brewing. Legal breweries are sometimes mentioned where they produced real beer contrary to Prohibition laws.

The restricted attention given the national industry is understandable, however: beer history is concerned with beer! The dark days are comparatively unimportant compared to the repeal of the Eighteenth Amendment and restoration of legal beer from April 7, 1933.

Yet, the story of breweries’ lawful activities between 1920 and 1933 is absorbing. Indeed a book could easily be written on it. In these notes I’ll refer to two poles or facets of that experience, one economic, the other an excursion in human interest (or, as viewed from 2019, social history).

First, the economic/business side: Carlos Eduardo Hernández holds a UCLA doctorate and is a professor of management studies in Colombia. In 2016 he wrote a paper on how American breweries adapted during National Prohibition and earlier when beer was banned under local option.

The study can be seen here, “Adaptation and Survival in the Brewing Industry during Prohibition”. In part reliant on sophisticated math and econometrics, it concludes that breweries confronted with local prohibition years before National Prohibition adapted better than those for whom the latter was the first shock.

He argues the case through various metrics including an analysis of inputs used by breweries, especially equipment purchases. He concludes in part:

… [The] historical context allows me to follow breweries throughout an initial shock of heterogeneous intensity (local prohibition), followed by a common, larger, shock (federal prohibition). By studying survival throughout both shocks, I show that adaptation – the making of irreversible investments in response to the first shock – increases the ability of firms to survive the second shock, even if selection  – the exit of the least productive firms –  also occurs in response to the first shock. My novel dataset on machinery acquisition and product diversification corroborates the testable implications of the adaptation mechanism.

The key components of my mechanism – irreversible investments and multi-product firms –  are present in many industries of today. For example, firms that span multiple industries account for 81 percent of the manufacturing output and 28 percent of the number firms in the US (Bernard et al., 2010).

While many might consider the typical modern brewery a single-purpose business, one need only think of Samuel Adams’ aka Boston Brewing Company’s forays into cider and hard seltzer products to see the justice of Hernández’ analysis. Today too, the advent of kombucha, sake, N/A beer, and marijuana-flavoured beverages shows that breweries can benefit from non-beer beverages and preserve competitiveness in an evolving market.

Considering too the steady numerical decline of American breweries even before National Prohibition – from about 1800 in 1905 to c.1200 in 1920 – the trend may have continued even had National Prohibition never occurred. Local option probably played a small part in the drop before 1920, as in 1915, as I’ve discussed earlier, national beer production was at an all-time high. It subsequently fell under war-related materials restrictions and finally the laws implementing the Eighteenth Amendment.

Business efficiency surely played a leading role in the pre-1920 process, as it did for the long-term cull of breweries commencing from 1933. By 1976 there were under 100 breweries in America. Therefore, had National Prohibition never occurred it is likely in my view that not more than 600 breweries would have survived to 1933 anyway.

A further notable example of brewery success during Prohibition is Pennsylvania’s Fort Pitt Brewery, which had a 51-year run starting in 1906.

In this December 1932 article in The Pittsburgh Press, the writer profiled the brewery and its Czech immigrant brewer, Joseph Vokral. Vokral had worked for many years in the legal industry before Prohibition, in Chicago, arriving in Pittsburgh relatively late in his career in 1925.

He was taken on due to his brewing skills and ability to make a saleable near beer, its production is described in the article. It sounds much like a traditional pilsener except the alcohol was removed in the last stage, similar to Trommer’s product in New York.

The journalist found Vokral’s college education a novel element. Most brewers in those days received either on-the-job training or perhaps a stint at one of the (fairly new) brewing schools in the country.

Vokral was clearly a partisan of Czech lager brewing, preferring (understandably) his birth nation’s hops. His near beer was probably very good, it would be interesting to try it alongside the current crop.

Of course real beer came back the following year. Fort Pitt Brewery had many ups and downs after, by some accounts never fully recovering from the decease in 1935 of its main shareholder Samuel Grenet, a charismatic politician-businessman.

While many breweries foundered during Prohibition – of that there is no doubt – the twin pole analyses of economic and social history help illuminate a period often thought of as one long disaster for American breweries: it wasn’t.

…………………….

*Its greatest success was the early to mid ’20s but the brand faltered finally due, it has been suggested, due to the concurrent successes of organized bootlegging and homebrewing. In contrast, Trommer’s all-malt near beer sold so well Trommer invested a large sum to expand production at the end of the ’20s – see the source cited in my post on near beer and Trommer a few days ago.

 

 

2 thoughts on “Brewery Success During Prohibition

  1. Interesting post on other businesses of breweries. Adolph Coors had a technical ceramics company (predating prohibition) that produced a variety of labware for high temperature (at and above 1200C) heat treatments. We used Coors high alumina crucibles in our Materials Science lab through the 1980s and 90s. The company had used the familiar red script Coors mark on packaging, but now is named CoorsTek with updated font. Any more unusual side businesses?

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